New research showcasing the sector, a booming population, car sales growth, and government initiatives to curb auto pollution fuel a rise in Egypt’s automotive components industry.
According to German consultants Africon GmbH, these elements, combined with post-pandemic economic development, have propelled the Egyptian market for automotive spare parts, accessories, and vehicle components, which are now worth between $1-2 billion.
Increasing Possibilities
According to the IMF, growth in Africa’s second-largest economy, with a GDP of $360 billion, will dip to roughly 2.5 percent this year, then increase to more than 5 percent from 2022 onward.
According to a recent report by Africon, after a difficult year in 2016/17, inflation has dropped to roughly 6%, unemployment is on the decline, and GDP per capita in US dollar terms has increased by nearly 50%.
“As a result, Egypt has been the leading receiver of FDI in Africa for several years in a row, getting almost $9 billion in 2019 and about $6 billion in 2020,” according to the research.
From 0 to 50, there’s been a lot of growth.
Cairo’s automobile industry, which is noted for its congested roadways, is one of the sectors benefiting from the country’s overall economic growth.
With over six million vehicles on the highways, the country has one of Africa’s largest vehicle fleets, with the bulk of them being passenger automobiles (approximately 4.6 million).
Then there are about a million trucks and around 470,000 buses. The majority of passenger cars use gasoline engines, but many business vehicles use diesel engines. As the global energy market changes to cleaner options, this could soon change.
“The government is boosting the number of dual-fuel vehicles that can run on both gasoline and compressed natural gas,” says the report (CNG). CNG is already used in around 300,000 automobiles in Egypt. This figure is expected to rise in the coming years, according to the publication.
Egypt is also pursuing alternatives to internal combustion engines that are more environmentally friendly. Last year, as part of its green program incentives, the government announced a plan to encourage people to replace outdated vehicles with new ones that run on compressed natural gas (CNG). As a result, China’s Dongfeng Motors has announced plans to build up to 25,000 electric vehicles per year in an Egyptian factory.
The country’s automobile fleet is shifting in terms of brand. According to the analysis, Chevrolet/Isuzu, Hyundai, Toyota, and Nissan’s market dominance could be eroded by the introduction of European and Chinese brands, which are fueled by advantageous import tariffs.
According to the whitepaper, new car sales in Egypt have recently risen to around 200,000 units per year, with roughly half of these being built domestically.
“Egypt is home to GB Auto, General Motors Egypt / Mansour Automotive, and Nissan, among other significant local vehicle assemblers. While the majority of passenger vehicles are built for the domestic market, many buses are exported to regional markets,” the document explains.
Switching lanes
Change is also coming to Egypt’s largely imported spare parts and components sector, which is controlled by Asian suppliers such as China, Korea, and Japan.
However, the local component manufacturing business is gaining traction, offering a variety of batteries, brake parts, wiring, and other components to local vehicle assemblers and export markets.
Egypt’s importer and distributor landscape is a jumble of small and large businesses, most of which are situated in Cairo.
Importers and distributors sell directly to end-users, workshops, and a nationwide network of wholesalers and retailers.
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